October's 10 most-bought trusts

The popularity of global and UK-focused closed-ended funds among clients of Interactive Investor was unabated in October, despite market turbulence fuelled by a slowdown in Europe, US quantitative easing coming to an end, the spread of Ebola and the threat posed by Islamic State in Syria and Iraq.

It seemed this turbulence proved too much for investors in emerging markets, with Templeton Emerging Markets plummeting from third most popular investment trust to ninth among investors on Interactive Investor. Managed by Dr Mark Mobius, this Money Observer Rated Fund has a market capitalisation of £1.9 billion and the shares are trading on a 7.9% discount to net asset value. That compares with a 12-month average discount of 8.7%. The trust has a high weighting to China, and with analysts warning of a further slowdown in its rate of growth, this is also having a knock-on effect on commodity prices.

In their turn most exploration and production companies are out of favour, along with the funds that hold them. However BlackRock World Mining Trust has managed to hold on to its second most-bought title for the second month in a row.

Despite this Money Observer Rated Fund being one of the most-popular investment trusts since February - only vanishing from the most-bought list for one month since, it is also the worst performing trust among the 10 most popular over a year. Indeed it has lost nearly a fifth of its value over the past month and close to 30% over three. Not only have weak commodity prices weighed on the trust, so has the collapse of London Mining. The loss of royalty payments from this source has cast doubt on the sustainability of the trust’s future dividend stream.

"Commodities continue to struggle as abundant supply and weaker than expected demand weigh on prices," says Rebecca O'Keeffe, head of investments at Interactive Investor. "However, investors have started to buy into a potential recovery story and will be hoping that Chinese demand returns to provide a foundation for metal prices."

Other popular global trusts in October were Scottish Mortgage Investment Trust, retaining its most-bought title for the ninth consecutive month, Biotech Growth, Witan Investment Trust and new entry Bankers Investment Trust, all of which are Money Observer Rated Funds.

It's easy to see why Baillie Gifford's Scottish Mortgage trust continues to win over investors. Although the share price can be volatile over shorter time frames its returns are consistently better than the global sector average. Manager James Anderson has helped steer the investment company to return nearly 172% over the last five years, with holdings including Baidu, Amazon and Illumina. The trust currently trades at a small 1.3% premium to NAV and it has the largest market capitalisation of the top 10 group at just under £3 billion.

"It is the standout performer in the global sector," adds O'Keeffe, "so it is no surprise that Scottish Mortgage tops our most bought investment trust list for the ninth month in a row."

Biotech Growth had another successful month, climbing back up to re-take its position as third most-bought trust. The specialist trust has returned 261% over three years and the shares rose 9% in October alone.

A new entry to the most-bought list last month was Bankers Investment Trust, a global trust with a market capitalisation of £631 million that aims to generate growth higher than the FTSE All-Share index. Although the fund has underperformed its sector and the All-Share over the last 12 months, it has beaten both benchmarks over three and five years, returning 56% and 88% respectively. Manager Alex Crooke's top three holdings are BP, GlaxoSmithKline and British American Tobacco. The share are currently trading at a 4% discount to NAV.

Falling in popularity compared to last year, Witan Investment Trust took the eighth spot. Despite being a global trust, manager Andrew Bell favours the UK and the financial sector, with Reed Elsevier, Diageo and the London Stock Exchange Group the top three holdings. It has a £1.4 billion market capitalisation and with a NAV of 735.3p, the shares trade at a 1.1% discount.

UK equity income-focused trusts continued to stay in favour last month, with Finsbury Growth and Income, City of London and Temple Bar making the grade.

According to data from FE, Finsbury Growth and Income Trust is the most successful of the three, with its returns over three, five and 10 years in the top quartile of the UK equity income sector. In the last 12 months the trust has returned 5.8% and 1.3% in October, coming in as fourth most-popular with Interactive Investor users. Manager Nick Train looks to the consumer goods sector as being the most attractive, with his largest holdings including Unilever, Diageo and Pearson.

Also maintaining its presence in the 10 most-bought trusts at number five last month was Henderson's City of London trust, which only underperformed its sector over three years, returning 49.3% compared to the 53% average. With a market capitalisation of £1.1 billion, the trust has Royal Dutch Shell, HSBC and British American Tobacco as its top holdings.

Temple Bar, which weighed in at number six in October, had the worst performance among the three, losing 2.2% compared to the sector's 0.6% loss. Over a year, meanwhile, the trust is treading water, but beats its sector over five and ten years, returning 103% and 183% respectively. Alastair Mundy, head of contrarian investing at Investec, manages the £789 million trust, and despite recent lacklustre performance the shares trade at a 2% premium.

Despite concerns over eurozone growth and inflation figures, Jupiter European Opportunities shot to number eight, another new entry. The trust has more-or-less performed in line with its sector over the last year, but is a regular top performer over three, five and ten years. It has a market capitalisation of £400 million and the shares trade at a slight discount to net asset value.